Spotting slavery: Why Hong Kong banks are looking for Q rather than James Bond
With the introduction of a sweeping British legislation aimed at eradicating modern slavery, experts say it is time for Asian banks to up their game.
Under the Modern Slavery Act, which came into effect in October, Asian banks with presence in the UK are required to provide an annual statement on the steps they have or have not taken to keep modern slavery and human trafficking out of their own business and the companies they are in business with.
According to Archana Kotecher, head of legal at Liberty Asia, a non-governmental organisation (NGO) that supplies intelligence to banks and global monitors, the Act makes modern slavery a criminal offence and organisations found to have been involved will have their assets of the previous six years considered criminal proceeds.
READ MORE: From debt bondage in Hong Kong to forced marriage: The battle and dire need to define modern slavery
Recognition of modern slavery and human trafficking issues in Hong Kong is low among financial institutions, say NGOs. Asked on the steps they are taking to eradicate slavery, banks refer to their anti-money laundering protocols but most struggle to come up with specific steps taken on check human trafficking or how they plan to prepare for the new British Act.
“There are a lot of assets that are managed here, while human slavery is happening in our backyard,”
said Matthew Friedman, chief executive of Mekong Club, an activist organisation that provides training, technology and data to banking institutions on process improvement.
“Laws in Hong Kong are lagging behind,” Kotecher said, which contributes to ignorance. In her research, she notes: “The existing definition of human trafficking focuses on cross-border sex trafficking for exploitation in prostitution. This excludes trafficking for labour exploitation, debt bondage, domestic servitude, slavery or practices similar to slavery and organ trafficking. Forced labour is not even a criminal offence in Hong Kong.”
According to Keith Pogson, senior partner at Ernst and Young, banks on average spend between £500 to £1000 on new small and medium-sized enterprise clients to research and understand their businesses and ensure their identities are bona fide before they open accounts. The amount gets bigger for larger, more complex businesses.
It is now increasingly common for banks to hire former members of intelligence agencies and deploy artificial intelligence to spot potential criminals. In serious cases, banks are now even bringing in auditor firms’ forensics teams to use their ‘ethical hackers’ and electronic databases, switching from James Bond to the ‘Q’ type of intelligence.
“These are the geeks who can run the algorithm to identify criminals. That’s because traditionally that [the intelligence community] is the biggest area where the work is done in identifying transactions and to make value of data.”
“Criminals are very good. They know how their banks act. Because of the volume, you can’t do it without technology,” said Richard Moore, head of financial crime and chief information security officer at DBS.
Globally, 21 million people are estimated to be in slavery, fuelling a business that amount to US$121 billion a year.